UK’s Remote Gambling Regime To Be Reviewed In Light Of Rapid Technological Advances

In April 2009, the UK Minister for Sport announced that in response to the “rapid technological advances in online gambling”, the UK Government was going to explore a range of measures to ensure that British licensees were competing on a level-playing field with their overseas competitors. The DCMS said at the time that the Government would be looking to make the regulatory system fairer for UK licensed operators, but would also be working with the Gambling Commission on a number of issues such as recouping regulatory costs, obtaining funding for research into problem gambling in the UK and contributions to the Horserace Betting Levy (the annual fee which is collected from bookmakers and used to support the horseracing industry).

Whitelist operators who were advertising their services in the UK were singled out in the announcement as under the current system they benefit from a regime which allows them to advertise in the UK if they are based within the European Economic Area, Gibraltar or in one of the jurisdictions included on the Whitelist. Inclusion on the Whitelist also means that operators do not pay any levy on horseracing bets or wagers.

Fast-forward to the Minister for Sport’s latest Written Ministerial Statement, which is now promising consultation on changing the existing system of remote gambling regulation in Britain “so that all operators who want to target British consumers must be licensed by the Commission” (emphasis added). The Minister acknowledged that despite the fact that British gamblers constituted one of the largest customer bases for online gambling in the UK, “increasingly few companies active in the British market are now regulated by the Commission”. In order to ensure the “protections” in the Gambling Act 2005 are applied, legislative reform is therefore being considered to ensure “all operators active in the British market adhere to the Gambling Act, its secondary legislation and the Commission’s standards and requirements” (emphasis added).

Operators who are active in the British market and who target British gamblers will, according to the Minister, be obliged to “report suspicious betting activity to the Commission and UK sports bodies, as well as comply with the Commission’s software testing, age verification, self exclusion, technical standards and social responsibility requirements bringing a more consistent level of protection for British consumers”. The stated aim of these measures is “to ensure the protections in the Gambling Act: to keep gambling crime free, to ensure gambling is fair and open, and to ensure that children and vulnerable people are protected from harm, continue to be afforded to British consumers”.

In particular, it remains to be seen how the UK Government intends ensuring that the above-mentioned measures can be directed towards those online operators active in the British market who are targeting British consumers, given the nature of the Internet and EU rules which require businesses to conduct trade and services openly and freely across EU Member State borders, including services rendered on the Internet. The recent landmark ruling delivered by the ECJ in Santa Casa v Bwin may have boosted the UK Government’s confidence that imposing such measures is consistent with EU law in the field of online gambling. In this regard, subject to the conditions set out in Santa Casa v Bwin, the application of the freedom to provide services in the field of online gambling has to be mitigated to a certain extent: a case-by-case assessment must be carried out in light of the conditions set out in the above-mentioned ruling.

At this stage, the question of tax revenue from any changes is not being discussed.